Medicare Decisions For Myriad Present A Mixed Bag

On December 22, CMS announced its year-end coverage decisions for Myriad Genetics, Inc. MYGN, including the non-coverage of Vectra DA.

Barclays’ Jack Meehan maintains an Equal-Weight rating on the company, with a price target of $22.

Surprising Decision

Expressing surprise at the non-coverage decision, the analyst mentioned that the decision was based “on a single study published in August 2016, which showed discordant results among patient populations using the test.”

Myriad Genetics had refuted the study, and Meehan expects the company to enter into discussions with CMS to reverse the decision.

The analyst pointed out that CMS’ decision was very surprising, given that Vectra DA has been covered by Medicare since 2014, and there were 20 peer-reviewed studies that supported the clinical validity and utility of the test.

“The decision puts at risk Medicare revenue for Vectra DA, which in aggregate represents 7 percent of our total company forecast for FY2017,” Meehan stated.

The analyst believes Medicare coverage for the test was likely to be an overhang on the stock till the decision was remediated.

A Mixed Bag

On a more positive note, Meehan noted that CMS recommended expanding coverage for Prolaris, which could potentially add about $100 million in addressable reimbursed opportunity.

“Expanding coverage for the company’s pipeline of genomic tests is a core tenet of the Myriad thesis, and this decision had been long-awaited by the market,” the analyst went on to say.